Order 2 01 1

- 5

- 18

Served: M ay 2 6, 2 01 1

Issued by the Department of Transportation

on the 26 th day of May , 20 1 1

Application of

ATLAS AIR, INC.

for a certificate of public convenience and necessity under

49 U.S.C. § 41102 to engage in interstate charter air transportation of persons, property

, and mail Docket DOT

- OST

- 20 09

- 0268

ORDER ISSUING CERTIFICATE Summary

By this order, we (1) find that Atlas Air, Inc. (“ Atlas ”)

, is a citizen o f the United States and is fit, willing, and able to provide interstate charter air transportation of persons, property, and mail

, using

two large aircraft ; and (2) issue it a certificate of public convenience and n ecessity authorizing such operations , subject to conditions.

Background

Section 41102 of Title 49 of the United States Code (the “ Transportation Code”) directs us to determine that applicants for certificate authority to provide interstate charter air transportation of persons, property and mail are “fit, willing, and able” to perform such transportation and to ensure that all operations relating to this authority conform to the provisions of the Transportation Code and the regulations and requirements of the Department. In making fitness findings, the Department uses a three

- part test that reconciles the Airline Deregulation Act’s liberal entry policy with Congress’ concern for operational safety and consumer protection. The three areas of inquiry tha t must be addressed in order to determine a company’s fitness are whether the applicant (1) will have the managerial skills and technical ability to conduct the proposed operations, (2) will have access to resources sufficient to commence operations

withou t posing an undue risk to consumers or their funds , and (3) will comply with the Transportation Code and regulations imposed by Federal and State agencies. We must also find that the applicant is a

U. S. citizen.

On October 23, 2009, Atlas filed applicati ons requesting authorization under 49 U.S.C. § 41102 in

Dockets DOT

- OST

- 2009

- 0267 and DOT

- OST

- 2009

- 0268, to engage in interstate and foreign charter air transportation of persons, property, and mail. Atlas’ request for interstate authority lack ed the requ ired

domestic s ervice proposal, and therefore t hat application was suspended until Atlas provided such information to the Department. The company did, however, provide all the necessary fitness information for its proposed foreign charter passenger operat ions. Consequently, the Department found UNITED STATES OF AMERICA

DEPARTMENT OF TRANSPORTATION

OFFICE OF THE SECRETARY WASHINGTON, D.C.

U N I T E D S

T A T E S O F A

M E R I C A D E P A R T M E N T O F T R A N S P O R T A T

I O N2

Atlas fit for foreign charter passenger authority and issued to it an effective certificate authorizing such operations. 1

On March 9, 2011, Atlas submitted a domestic service proposal in Docket DOT

- OST

- 2009

- 02 68

. 2 The

air carrier stated that it intends to complement its existing foreign charter passenger operations by providing domestic passenger charter services for the U.S. Military’s Air Mobility Command, and to supplement such usage with commercial charters, using the same leased B

- 747 series aircraft used in the air carrier’s foreign charter operations. Atlas indicates that it may acquire additional aircraft in the future for similar purposes as demand for its services increases. No objections to Atlas ’ interstate charter application were filed in the docket

.

As discussed below, our review of the information in Atlas ’ application indicates that the air carrier is fit

to hold the interstate charter passenger authority it seeks. We note that the interstate flights contemplated by Atlas are similar in scope to those it is currently conducting internationally. Under these circumstances, and because of the findings made below, we have decided that neither an oral evidentiary hearing nor a show

- cause proceeding is necessary for us to make a decision in this case. Therefore, in accordance with 14 CFR § 302.210(a)(2) of our regulations, we will proceed dir ectly to final approval of Atlas ’ certificate for interstate charter passenger authority.

FITNESS

The Company

Atlas is a corporation that was organized under the laws of the State of Delaware in April 1992. The applicant was found fit to conduct interstate and foreign scheduled all

- cargo air transportation in November 1992 and commenced operations under this authority in March 1993. 3 The air carrier holds a Federal Aviation Regulation (“FAR ” ) Part 121 operating certificate from the Federal Aviati on Administration (“FAA”) and operates a fleet of 26 B

- 747 freighter aircraft on a scheduled basis between the U.S. and South America, and globally on a non

- scheduled basis for other airlines, freight consolidators, and the U.S. military

. Atlas also opera tes two B

- 747 passenger aircraft in foreign charter passenger air transportation from Houston, Texas

, to Luanda, Angola

, on behalf of the United States

– African Energy Association.

Since receiving effect ive foreign charter passenger authority in May 2010, Atlas states that it has not undergone any material changes in areas affecting its fitness. The air carrier continues to be wholly owned by Atlas Air Worldwide, Inc. (“AAWW”), a publicly traded Delaware co rporation with no single shareholder owning 10 percent or more of its outstanding voting stock. AAWW and Atlas remain under the same Board of Directors, all of whom are U.S. citizens. Additionally, there have been no changes to the applicant’s key manage ment and technical personnel.

1 See Order 2010

- 5

- 27, issued May 25, 2010.

2 On that same date, Atlas filed a motion for confidential treatment under 14 CFR § 302.12 (“Rule 12”) to withhold from public disclosure certain information filed in support of its application. A more detailed discussion regarding the applicant ’s

Rule 12 mo tion can be found in the CONFIDENTIAL TREATMENT section of this order.

3 See Order 93

- 32

- 7, issued March 5, 1993.3

As previously mentioned, Atlas intends to provide interstate charter passenger operations on behalf of the U.S. Military under which the government will compensate Atlas for its services without regard to the number of pass engers carried. It has been the Department’s practice, with respect to fitness based on

similar fee

- for

- service agreements , not to apply its standard financial fitness criteria in determining the company’s fitness. 4 We see no reason not to follow the sam e practice here. However, we do require that such applicants demonstrate that they have sufficient financial resources to cover their pre

- operating

costs to commence operations.

According to its most recent 10

- K filing with the Securities Exchange Commis sion (“SEC”) , Atlas and its parent company had cash and cash equivalent s of $588.9 million on deposit at December 31, 2010.

F or the last three years , AAWW has been pr ofitable. For calendar years 2008 , 20 09 , and 20 10

, th e

c ompany reported net income of $ 60.02 million, $ 76.15 million, and $ 142.95 million, respectively. Additionally, at December 31, 2010, AAWW had current assets of $727.43 million and current liabilities of $ 269.04 million, giving the company positive working capital of $458.38 million. T he company also reported stockholder’s equity of $1.04 billion.

In support of its proposed operations, the applicant submitted a confidential supplement to its application, which included forecasts of its pre

- operating costs and first

- year revenues and ex penses for its proposed charter operations. We have reviewed the applicant’s projected direct costs on a block hour basis against the costs reported by other air carriers operating similar aircraft, and believe them to be reasonable. Therefore, we find th at the applicant continues to have access to sufficient financial resources to cover its pre

- operating costs of the passenger service and operating costs for three months.

The applicant states that there are no actions or outstanding judgments against it s key personnel nor have there been any charges of unfair, deceptive or anti

- competitive business practices, or of fraud, felony or antitrust violations brought against any of these parties in the past ten years.

A review of our records and other inform ation available to us indicated that two changes affecting Atlas’ compliance disposition have occurred since the Department ’s May 2010 issuance of effective foreign charter passenger authority to the applicant. First, the six open FAA investigations which were pending against Atlas are now closed and were resolved without a civil penalty imposed. Second

, the FAA has opened two new investigations regarding Atlas’ operations

- FAA case number 2011EA150031

, which

involves a maintenance violation which occurred on February 13, 2011, and FAA cas e number 2011EA150047, which relates to Atlas improperly operating an a ircraft on March 27, 2011, allegedly

violat ing its certificate conditions

. All other compliance issues remain t he same as presented in the Department’s Show Cause Order in response to Atlas’ foreign charter passenger application, and are therefore incorporated here by reference

. 5

A ccording to the FAA, the applicant has conducted its operations satisfactor ily and t he agency knows of no reason why the air carrier should not be granted the authority it seek s. Moreover, Atlas notes that neither it nor any of its key personnel have been involved in an accident or incident in the year preceding its application or at any time in the past which remains under investigation by the FAA, the National Transportation Safety Board , or the company itself.

4 See , for example, Order 2004

- 9

- 9, Chautauqua Airlines, Inc. , and Order 2000

- 11

- 22, Potomac Air, Inc

. 5 See Order 2010

- 4

- 8, issued April 15, 2010.4

In light of these circumstances, we tentatively find that Atlas has the proper regard for the laws and regulations governing i ts services to ensure that its aircraft and personnel conform to applicable safety standards and that acceptable consumer relations practices will be followed.

Based on our review of the information available to us, we have determined that no signi ficant changes affecting the air carrier’s fitness ( i.e. , management, financial condition, compliance disposition, or ownership) have occurred since the Department’s fitness finding of May 2010 , and w e have no other

information at this time that leads us to conclude that Atlas is not fit , willing, and able to conduct its proposed interstate charter passenger operations

.

In light of the above, we find that Atlas is a U.S. citizen

, that it continues t o have a competent
management team, that it has adequate financial resources to conduct its proposed interstate charter

passenger operations, and that it has a satisfactory compliance disposition to conduct the operation s proposed.

CERTIFICATE CONDITIONS AND LIMITATIONS

While we are making the certificate authority issued here effective immediately, Atlas’ ability to conduct interstate charter passenger operations with large aircraft under this certificate remains subject to its receipt of the appropriat e approval for interstate charter passenger operations from the FAA.

W e remind Atlas of the requirements of 49 U.S.C. § 41110(e). Specifical ly, that section requires that, once an air carrier is found fit initially, it must remain fit in order to hold i ts authority. To be

assured that certificated air carriers continue to be fit after effective aut hority has been issued to them, we require that they supply information describing any subsequent substantial changes they may undergo in a reas affecting fitn ess. 6 The compliance of the company with this requirement is essential if we are to carry out our responsibilities under section 41110(e). 7

Moreover, as noted earlier, Atlas is currently limited to operations with no more th an two large aircraft in its passenger operations . We will continue our requirement that Atlas notify the Department in writing at least 45 days in advance of any planned expansion in its passenger fleet and demonstrate its fitness for such operations prior to implementing se rvice with any additional aircraft.

6 The air carrier may contact our Air Carrier Fitness Division to report proposed substantial changes in its operations, ownership, or management, and to determine what additional information, if any, will be requir ed under section 204.5. In addition, by notice dated July 21, 1998, the Department requested air carriers to provide a 30

- day advance notification of any proposed change in ownership, restructuring, or recapitalization. If the air carrier fails to file t his updated information or if the information fails to demonstrate that the air carrier will continue to be fit upon implementation of th e substantial change, the Department may take such action as is appropriate, including enforcement action or steps to

m odify, suspend, or revoke the air carrier's certificate authority.

7 We also remind Atlas about the requirements of section 204.7 of our rules. This sectio n provides, among other things, that (1) the certificate authority granted to a company shall be re voked if the company does not commence actual flying operations under that authority within one year of the date of the Department's determination of its fitness; (2) if t he company commences operations for which it was found fit and subsequently ceases su ch operations, it may not resume certificated air carrier service unless its fitness has been redetermined; and (3) if the company does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.5

Finally, to aid the Department in monitoring the fitness of new air carriers, we ask that all newly

certificated air carriers submit a detailed progress report within 45 days following the end of the first year of cer tificated interstate operations, to the Air Carrier Fitness Division. The report should include a description of the air carrier’s current operations (number and type of airc raft, principal markets served, total number of full

- time and part

- time employees ), a summary of how these operations have changed during the year, a discussion of any changes it anticipates from its current operations during its second year, current financial statements, 8 and a listing of current senior management and key technical

pe rsonnel. The air carrier should also be prepared to meet with staff members of the Fitness Division to discuss its current and future operations.

REQUEST FOR CONFIDENTIAL TREATMENT

On March 9, 2010 , Atlas filed a motion for confidential treatment unde r 14 CFR § 302.12 (“Rule 12”) to withhold from public disclosure certain information filed in support of its interstate charter application. Specifically, Atlas requested confidential treatment of financial information and projections relat ed to the opera tion of the single B

- 747

- 400 passenger aircraft leased primarily to allow Atlas to enter into the passenger charter market for the U.S. military and to operate commercial charters

.

Rule 12 instructs us to evaluate requests for confidential treatment in accordance with the standards of disclosure found in the Freedom of Information Act (5 U.S.C. section 552). Information may be withheld from disclosure under 5 U.S.C. 552(b)(4) if it is (1) commercial or financial, (2) obtained from a person outside of th e government, and (3) privileged or confidential ( Gulf and Western Industries, Inc.

v. United States , 615 F.2d 527, 529 (D.C. Cir. 1979)).

There is no question that the information for which Atlas seeks confidential treatment is financial or

commercial in nature and that it was obtained from a person outside the government. The remaining question is whether the information is privileged or confidential

-- whether “disclosure of the information is likely to have either of the following effects: (1) impair th e Government’s ability to obtain necessary information; or (2) cause substantial harm to the competitive position of the person from whom the information was obtained” ( National Parks and Conservation Association v. Morton , 498 F.2d 765, 770 (D.C. Cir. 197 4)). Further, to be privileged or confidential, the information must not be of the type that is usually released to the public ( Gulf and Western Industries, Inc. v. United States , 615 F.2d 527, 530 (D.C. Cir. 1979)).

Based on our review of the informat ion, we grant Atlas’ request for confidential treatment . The

information contained in the confidential submission includes itemized start

- up and on

- going expenses associated with the lease and operation of the single aircraft. We agree that the release o f such material would allow Atlas’ competitors and others to readily calculate the underlying economic terms and Atlas’ competitors could then use this information to undermine its relationship with its customers by offering

more attractive terms . T he inf ormation for which Atlas seeks confidential treatment is similar to that for which we have granted confidential treatment in the past, and we see no reason not to do so here.

8 These financial statements should include a balance sheet as of the end of the company’s first full year of actual certificated operations and a twelve

- month income statement ending that same date.6

ACCORDINGLY,

1. We find that Atlas Air, Inc., is fit, willing, and able to engage in interstate charter air transportation of persons, property, and mail.

2. We issue a certificate of public convenience and necessity to Atlas Air, Inc.

, to engage in interstate charter air transportation of persons , property, and mail, subject to the Terms, Conditions, and

Limitations attached.

3

. We direct that should Atlas Air, Inc., wish to operate more than two large aircraft in its passenger operations , it must first provide the Department with at least 45

- d ays’ notice and demonstrate its fitness for such operations.

4

. We grant the request from Atlas Air, Inc. to afford confidential treatment to financial information and projections related to the operation of a B

- 747

- 400 series aircraft

.

5

. We will serve a copy of this O rder on the p ersons listed in Appendix A

.

By:

SUSAN L . KURLAND Assistant Secretary

for Aviation and International Affairs

An electronic version of this document is available on the World Wide Web at: http://www.regulations.gov

# Certificate of Public Convenience and Necessity for

Interstate Charter Air Transportation

This Certifies That



## ATLAS AIR

, INC

.

is authorized, subject to the provisions of Subtitle VII of Title 49 of the United States Code, the orders, rules, and regulations issued thereunder, and the attached Terms, Conditions, and Limitations, to engage in interstate charter air transportation of persons, property, and mail.

This Certificate is not transferable without the approval of the Department of Transportation.

By Direction of the Secretary

Issued by Susan L. Kurland

On Assistant Secretary for Effective on Aviation and International Affairs

### Attachment



### Terms, Conditions, and Limitations

ATLAS AIR, INC.

is authorized to engage in interstate charter air transportation of persons, property and mail between any point in any State, territory, or possession of the United States or the District of Columbia, and any other point in any of those entities.

This auth ority is subject to the following provisions:

(1) The holder shall at all times conduct its operations in accordance with the regulations prescribed by the Department of Transportation for the services authorized by this certificate,

and with such other r easonable terms, conditions, and limitations as the Department of Transportation may prescribe in the public interest.

(2) The holder's authority under this certificate is effective only to the extent that such operations are also authorized by the Feder al Aviation Administration (FAA), and comply with all U.S. Government requirements concerning security, including, but not limited to

49 CFR Part 1544. **∗ ∗** 

(3) The holder shall at all times remain a "Citizen of the United States " as required by

49 U.S.C. 40102(a)(15).

(4) The holder shall maintain in effect liability insuranc e coverage as required under

14 CFR Part 205. Failure to maintain such insurance coverage will render a certificate ineffective, and this or other failure to comply with the provisi ons of Subtitle VII of Title 49 of the United States Code or the Department's regulations shall be sufficient grounds to revoke this certificate.

(5) The holder is not authorized to engage in air transportation operations between points

within the State o f Alaska.

(6) Should the holder propose any substantial change in its ownership, management, or operations (as defined in 14 CFR 204.2(l)), it must first com ply with the requirements of

14 CFR 204.5.

**∗ ∗**  To assure compliance with all applicable U.S. Government requirements concerning security, the holder shall, before commencing any new service (including charter flights) to or from a foreign airport, contact its Principal Security Inspector (PSI) to advi se the PSI of its plans and to find out whether the Transportation Security Administration has determined that security is adequate to allow such airport(s)

to be served.2

(7) In the event that the holder commences operation s for which it was found "fit, willing, and able" and subsequently ceases all such operations, its authority under all certificates held shall be suspended under the terms of 14 CFR 204.7 and the holder may neither recommence nor advertise such operations unless its fitness to do so has been redetermined by the Department. Moreover, if the holder does not resume operations within one year of its cessation, its authority shall be revoked for dormancy.Attachment A

SERVICE LIST FOR ATLAS AIR INC

MR RUSSELL POMMER

ASSOCIATE GENERAL COUNSEL AND SENIOR

DIRECTOR OF REGULATORY AFFAIRS

ATLAS AIR INC

1147 PENNSYLVANIA AVENUE NW

SUITE 875

WASHINGTON DC 20006 MR PETER LYNCH

ASST CHIEF COUNSEL F OR

ENFORCEMENT AGC 300

FEDERAL AVIATION ADM INISTRATION

800 INDEPENDENCE AVE NUE SW

WASHINGTON DC 20591

MR ADAM KOKAS

SENIOR VICE PRESIDENT GENERAL COUNSEL

AND CHIEF HUMAN RESOURCES OFFICER

ATALS AIR INC

200 WESTCHESTER AVENUE

PURCHASE NEW YORK 10577

- 2543 MR WILLIAM WEBER

CERTIFICATION SECTION MANAGER

FAA AFS 900

45005 AVIATION DRIVE SUITE 131

DULLES VA 20166

MR ALLEN TAYLOR

POI FOR ATLAS AIR INC

FAA NEW YORK FSDO 15

900 STEWART AVENUE

GARDEN CITY NEW YORK 11530 MS ANNE SUISSA RTS 42

OFFICE OF AIRLINE INFORMATION

DOT/RITA/BTS E

- 34

1200 NEW JERSEY AVENUE SE

WASHINGTON DC 20590